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Cogent Communications (CCOI)
NASDAQ:CCOI
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Cogent Comms (CCOI) AI Stock Analysis

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CCOI

Cogent Comms

(NASDAQ:CCOI)

Rating:46Neutral
Price Target:
$36.00
▼(-2.39% Downside)
Cogent Comms' overall stock score is primarily impacted by its weak financial performance, characterized by declining revenues and high leverage. While there are positive developments in specific segments and liquidity improvements, the technical analysis indicates bearish momentum, and the valuation is challenged by negative profitability. The earnings call provides some optimism with growth in certain areas, but significant risks remain.
Positive Factors
Data Center Assets
There is strong interest from multiple parties in the data center assets, indicating potential opportunities.
Growth Prospects
Management increased the long-term EBITDA margin expansion guide to 200 basis points per year, showing confidence in growth.
Market Opportunities
Cogent retains an opportunity to take significant share within its product end markets.
Negative Factors
Cash Flow Concerns
Free cash flow burn continues to be a concern, affecting the company’s financial stability and leverage situation.
Debt and Leverage
The company's net debt leverage is elevated, leading to a high-risk rating.
Financial Stability
Cogent's slower financial progress raises risk to dividend.

Cogent Comms (CCOI) vs. SPDR S&P 500 ETF (SPY)

Cogent Comms Business Overview & Revenue Model

Company DescriptionCogent Communications Holdings, Inc., through its subsidiaries, provides high-speed Internet access, private network, and data center colocation space services in North America, Europe, Asia, South America, Australia, and Africa. The company offers on-net Internet access and private network services to law firms, financial services firms, and advertising and marketing firms, as well as heath care providers, educational institutions and other professional services businesses, other Internet service providers, telephone companies, cable television companies, Web hosting companies, media service providers, mobile phone operators, content delivery network companies, and commercial content and application service providers. It also provides Internet access and private network services to customers that are not located in buildings directly connected to its network; and on-net services to customers located in buildings that are physically connected to its network. In addition, the company offers off-net services to corporate customers using other carriers' circuits to provide the last mile portion of the link from the customers' premises to the network. Further, it operates data centers that allow its customers to collocate their equipment and access the network. The company operates 54 data centers and provides facilities to 3,035 buildings and on-net services to 1,817 to multi-tenant office buildings. It serves primarily to small and medium-sized businesses, communications service providers, and other bandwidth-intensive organizations. Cogent Communications Holdings, Inc. was founded in 1999 and is headquartered in Washington, the District of Columbia.
How the Company Makes MoneyCogent Communications generates revenue primarily through the sale of Internet access and data services. The company's key revenue streams include monthly recurring charges from customers for bandwidth and connectivity services, as well as one-time setup fees for new installations. Cogent also earns revenue from colocation services, where customers pay for space and power within its data centers to house their servers and equipment. Additionally, strategic partnerships with other telecommunications providers and content delivery networks enhance its service offerings and expand its customer base, contributing to its overall earnings. The company's focus on providing competitive pricing and high-quality service helps retain customers and attract new business, further solidifying its revenue model.

Cogent Comms Earnings Call Summary

Earnings Call Date:Aug 07, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant growth in the Wavelength and IPv4 leasing segments, along with improvements in EBITDA and liquidity. However, challenges remain with revenue decline in core segments, slow data center sales, and high leverage concerns.
Q2-2025 Updates
Positive Updates
Wavelength Revenue Surge
Wavelength revenues for the quarter were $9.1 million, a 150% increase year-over-year and a sequential increase of 27%. The company aims to capture 25% of the North American wavelength market.
Improvement in EBITDA and Margins
EBITDA increased sequentially by 11% to $48.5 million, and the EBITDA margin increased by 200 basis points to 19.7%. Adjusted EBITDA increased by 7% to $73.5 million, with margins expanding by 200 basis points sequentially to 29.8%.
Debt Refinancing and Liquidity Enhancement
Issued $174.4 million of debt at a reduced rate of 6.646% and $600 million of 6.5% secured notes maturing in 2032, enhancing liquidity by an additional $100 million.
Increased Dividend
The Board decided to increase the dividend by $0.005 per share quarterly to $1.015, marking the 52nd consecutive sequential increase.
IPv4 Leasing Revenue Growth
IPv4 leasing revenues increased sequentially by 6.3% to $15.3 million, representing a 40.1% increase year-over-year.
Negative Updates
Revenue Decline
Revenue for the quarter was $246.2 million, a sequential decline of $800,000. Corporate and Enterprise segments saw decreases in revenue due to grooming of off-net and low-margin contracts.
Challenges in Data Center Sales
While there are offers for data centers, a lack of meaningful deposits and commitments has been highlighted as a concern, delaying monetization.
Off-Net Revenue and ARPU Decline
Off-net revenue saw a year-over-year decrease of 8.3% and a sequential decrease of 4.8%. Average price per megabit decreased sequentially by 11% to $0.17 and by 30% year-over-year.
High Leverage Concerns
Net leverage reported at 6.6x on an LTM basis, raising concerns about the company's debt levels and future borrowing capacity.
Company Guidance
During Cogent Communications Holdings' Second Quarter 2025 Earnings Conference Call, key financial and operational metrics were discussed, highlighting a transformative period for the company. The quarter saw a substantial 150% year-over-year growth in Wavelength revenues, reaching $9.1 million, with a sequential increase of 27%. The company reported an EBITDA of $48.5 million, marking an 11% sequential improvement, while the EBITDA margin increased by 200 basis points to 19.7%. Additionally, the adjusted EBITDA rose by 7% to $73.5 million, with an adjusted margin of 29.8%, also reflecting a 200 basis point increase. The company emphasized its strategic focus on capturing 25% of the North American wavelength market and achieving a long-term average revenue growth of 6-8%. The reduction in provisioning intervals to approximately 30 days and the connection of 1,675 third-party carrier-neutral data centers were significant milestones. Cogent's debt transactions during the quarter, including an issuance of $600 million of 6.5% secured notes maturing in 2032, have enhanced liquidity, while a stock buyback program of $100 million was authorized to continue through 2026. The company remains optimistic about returning to positive top-line growth by mid-Q3 2025, with a focus on high-margin on-net services.

Cogent Comms Financial Statement Overview

Summary
Cogent Comms faces significant financial challenges, including declining revenues, high leverage, and negative profitability. While there are some operational efficiencies and improvements in free cash flow, the overall financial health is concerning, with risks stemming from high debt levels and negative returns.
Income Statement
45
Neutral
Cogent Comms shows a declining revenue trend with a negative revenue growth rate of -1.40% TTM. The company has struggled with profitability, evidenced by negative net profit and EBIT margins. However, the gross profit margin remains relatively stable, indicating some operational efficiency. The EBITDA margin is positive, suggesting potential for operational improvements.
Balance Sheet
30
Negative
The balance sheet reveals high leverage with a debt-to-equity ratio of 49.18 TTM, indicating significant financial risk. The return on equity is negative, reflecting poor profitability relative to shareholder equity. The equity ratio is low, suggesting limited financial stability and high reliance on debt financing.
Cash Flow
40
Negative
Cash flow analysis shows a negative operating cash flow, indicating challenges in generating cash from operations. However, the free cash flow to net income ratio is positive, suggesting some ability to cover net losses. The free cash flow growth rate is positive, indicating some improvement in cash generation.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.00B1.04B940.92M599.60M589.80M568.10M
Gross Profit335.84M394.27M396.69M371.45M363.46M348.95M
EBITDA165.24M161.29M1.56B208.43M201.08M190.47M
Net Income-216.28M-204.07M1.27B5.15M48.19M6.22M
Balance Sheet
Total Assets3.27B3.17B3.21B1.01B984.56M1.00B
Cash, Cash Equivalents and Short-Term Investments306.73M198.49M75.09M223.78M319.61M371.30M
Total Debt2.67B2.34B1.83B1.36B1.26B1.21B
Total Liabilities3.22B2.95B2.60B1.53B1.36B1.29B
Stockholders Equity46.67M222.85M609.56M-518.63M-373.10M-293.17M
Cash Flow
Free Cash Flow-233.02M-203.64M-112.29M94.74M100.34M84.37M
Operating Cash Flow-13.38M-8.64M17.34M173.71M170.26M140.32M
Investing Cash Flow-119.64M21.49M76.73M-78.97M-69.92M-55.95M
Financing Cash Flow10.62M105.92M-257.85M-144.85M-140.82M-116.00M

Cogent Comms Technical Analysis

Technical Analysis Sentiment
Negative
Last Price36.88
Price Trends
50DMA
42.48
Negative
100DMA
45.29
Negative
200DMA
57.23
Negative
Market Momentum
MACD
-1.33
Negative
RSI
43.39
Neutral
STOCH
35.08
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CCOI, the sentiment is Negative. The current price of 36.88 is above the 20-day moving average (MA) of 35.78, below the 50-day MA of 42.48, and below the 200-day MA of 57.23, indicating a neutral trend. The MACD of -1.33 indicates Negative momentum. The RSI at 43.39 is Neutral, neither overbought nor oversold. The STOCH value of 35.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CCOI.

Cogent Comms Risk Analysis

Cogent Comms disclosed 42 risk factors in its most recent earnings report. Cogent Comms reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Cogent Comms Peers Comparison

Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$1.64B17.1338.36%0.34%1.91%169.96%
67
Neutral
$2.67B25.0917.96%2.23%7.56%38.78%
62
Neutral
$4.08B-20.95%3.53%3.23%
60
Neutral
$46.60B4.09-11.41%4.12%1.85%-42.71%
60
Neutral
$440.85M-30.99%-8.67%63.35%
55
Neutral
$4.27B-0.81%0.40%-5.62%80.09%
46
Neutral
$1.81B102.75-93.59%10.91%-6.64%-569.94%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CCOI
Cogent Comms
36.88
-29.19
-44.18%
IDT
IDT
64.90
27.90
75.41%
IRDM
Iridium Communications
25.12
-0.68
-2.64%
LBTYA
Liberty Global A
11.88
1.60
15.56%
TDS
Telephone & Data Systems
39.51
17.09
76.23%
WOW
Wideopenwest
5.14
-0.41
-7.39%

Cogent Comms Corporate Events

Executive/Board Changes
Cogent Comms Announces Leadership Change in Sales
Neutral
Aug 15, 2025

On August 11, 2025, Cogent Communications Holdings, Inc. announced the upcoming retirement of James Bubeck as Vice President of Global Sales and Chief Revenue Officer, effective September 2, 2025. Mark Andrew Harris, who joined the company in 2023 following its acquisition of Sprint Communications, will assume the role, potentially impacting the company’s sales strategy and market presence.

Private Placements and Financing
Cogent Comms Announces New Financial Obligation
Neutral
Jun 18, 2025

The news release from Cogent Comms lacks specific information about the company’s industry, products, or market focus. The release references internal document items without providing substantial details about the company’s operations or strategic implications, leaving stakeholders without clear insights.

Private Placements and FinancingBusiness Operations and Strategy
Cogent Comms Prices $600M Senior Secured Notes
Positive
Jun 3, 2025

On June 3, 2025, Cogent Communications Holdings, Inc. announced that its subsidiaries have priced an offering of $600 million in senior secured notes due 2032, with an interest rate of 6.500%. The proceeds from the offering will be used to redeem existing notes due 2026 and for general corporate purposes. The offering is expected to close on June 17, 2025, subject to customary conditions, and highlights Cogent’s strategic financial management to optimize its debt structure.

Private Placements and FinancingBusiness Operations and Strategy
Cogent Comms Announces $600M Senior Secured Notes Offering
Positive
Jun 2, 2025

On June 2, 2025, Cogent Communications Holdings, Inc. announced that its subsidiaries, Cogent Communications Group, LLC and Cogent Finance, Inc., plan to offer $600 million in senior secured notes due 2032 through a private placement. The proceeds from this offering are intended to redeem existing $500 million senior secured notes due 2026 and for general corporate purposes. The issuance aims to strengthen Cogent’s financial position by reducing its consolidated leverage ratio, which would be adjusted to 4.24x post-offering, enhancing its market competitiveness.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 19, 2025